Convertible Note Primer

• What is a convertible note?
• Why do startups raise investment capital using convertible notes?
• What are the key parameters in a convertible note?
• What is a discount in a convertible note?
• What is a cap in a convertible note?
• What if the convertible note has both a discount and a cap?
• What does the maturity date indicate on a convertible note?
• What does the interest rate indicate on a convertible note?
• What happens to a convertible note if a company shuts down and goes out of business?
• Do convertible note holders get pro rata rights?
• Does a convertible note holder have a choice about converting a note in an equity financing round?
• What happens to a convertible note if a company is acquired or merges with another company?
• What does a “Most Favored Nation” clause in a convertible note do?